Japan's Trade Negotiators Criticized for 'Mistake' in US Tariff Strategy

Strategic Insights -

The head of Japan's influential Japan Association of Corporate Executives has accused the government of a "mistake" in its trade negotiating strategy with the US, following President Donald Trump's announcement of 25 per cent tariffs on Japan. Takeshi Niinami, chief executive of Suntory, stated that Japan's insistence on a total exemption from Trump's tariffs may have left the US president feeling "betrayed", and that a more flexible approach could have secured a 10 per cent base tariff. Niinami's comments came after weeks of seemingly fruitless negotiations between Tokyo and Washington, despite claims by both sides that progress was being made.

Key Takeaways:

  • Japan's insistence on a total exemption from Trump's tariffs may have been a "big mistake", according to Niinami, as it may have left the US president feeling "betrayed".
  • A more flexible approach could have secured a 10 per cent base tariff, according to Niinami.
  • Tokyo trade negotiator Ryosei Akazawa was not given a mandate to concede some ground on tariffs, according to officials in the US and Japan.
  • Japan has consistently demanded an exemption from Trump's tariffs, citing the allies' "special relationship".
  • Former US official David Boling stated that Japan "badly miscalculated" by taking a maximalist position that the US must eliminate all tariffs.
  • Japanese officials said Tokyo's negotiator, Akazawa, was "permanently ready" to fly to Washington for further talks.
  • Mitsunobu Koshiba, a director of several leading Japanese companies, suggested that Japanese groups could absorb the tariffs due to the weak yen.

Statistics:

  • 25%: The new tariff rate imposed by Trump on Japan.
  • 1 percentage point: The increase in the original tariff rate announced in April.
  • 10 per cent: The possible base tariff rate that could have been secured with a more flexible approach, according to Niinami.
  • 40 minutes: The length of a phone call between US commerce secretary Howard Lutnick and Tokyo trade negotiator Ryosei Akazawa.
  • Y=145: The level of the yen in exchange for tariffs, mentioned by Mitsunobu Koshiba as a potential acceptable level.

Sources:

  • The Financial Times -
  • The Wall Street Journal -
  • Bloomberg -